By Donna Clements
Each year the Social Security and Medicare Trustees issue updated reports on the trust fund status for these two programs. The 2020 reports released on April 22, 2020, however, the data was finalized before the COVID-19 outbreak. The coronavirus could speed up the insolvency date of the Social Security program because of fewer payroll taxes being collected to fund the program. The bottom line is the Social Security program is still a stable source of income for keeping many retirees out of poverty and a good retirement cushion for others.
The Social Security projection is that reserves will last until 2035, with 79% of benefits still payable at that time. This means the trust fund reserves that have been saving up through the years will be gone in 2035. After this date, payroll taxes will be the only source for benefit payments.
The projection for Medicare Part A Hospital Insurance (HI) is that it will last until 2026, with dedicated revenues to pay 90% of costs. Health care reform is an important tool to control costs, provide physician incentives, and prevent fraud. Work still needs to occur to guarantee the future of Medicare and historically, Congress has always taken action to prevent the depletion of these assets.
You can use the following table to see many of the 2020 Social Security and Medicare figures along with the 2021 projections. The actual 2021 figures typically release in September for Medicare and in October for Social Security.
About the Author: Donna Clements
Donna Clements is a Senior Associate at Mercer with over 30 years’ experience in Social Security and Medicare. Mercer’s more than 25,000 employees operate in over 130 countries and help you redefine the world of work, reshape retirement and investment outcomes, and unlock real health and well-being. Visit www.imercer.com/socialsecurity for more information and publications written on these topics.